This article was published in Labour Force, Australia (Cat no. 6203.0) October 2002.

INTRODUCTION

The number of unemployed persons and the unemployment rate are widely used as measures of the available labour resources which are not being utilised in the economy. However, despite the high profile of the unemployment rate, no single measure can fully capture the complexity of the labour market nor satisfy all the purposes for which such data are needed. The Information Paper: Measures of Underutilised Labour (cat. no. 6296.0) introduced a series of supplementary measures which, together with unemployment statistics, provides a wider range of indicators of underutilised labour.

This article extends the information presented in the Information Paper by updating the measures of labour underutilisation to September 2001, and by providing disaggregations by state and territory and by age group for September 2001.

MEASURES OF LABOUR UNDERUTILISATION

The ABS already provides a wide range of data on available labour resources and the extent of labour utilisation (in addition to unemployment data). These include persons with a marginal attachment to the labour force (in particular, discouraged jobseekers) and persons who are underemployed. The ABS has developed a series of supplementary measures based on these data which, together with unemployment statistics, provide a broad view of existing and potential labour resources and the extent to which they are being utilised. The four measures of labour underutilisation - the official unemployment rate and three supplementary measures - are presented in the table below.

MEASURES OF LABOUR UNDERUTILISATION - September 1994 to September 2001

1994

1995

1996

1997

1998

1999

2000

2001

%

%

%

%

%

%

%

%

Long-term unemployment rate(a)

3.0

2.3

2.3

2.6

2.4

2.0

1.5

1.5

Unemployment rate(b)

9.0

8.1

8.3

8.2

7.7

7.1

6.1

6.8

Labour force underutilisation rate(c)

14.1

13.8

13.8

13.6

13.0

11.8

10.9

12.5

Extended labour force underutilisation rate(d)

15.5

15.1

15.2

15.0

14.3

13.2

12.2

13.6

(a) Persons unemployed for 12 months or more as a percentage of the labour force.

(b) The unemployed as a percentage of the labour force.

(c) The unemployed plus the underemployed, as a percentage of the labour force.

(d) The unemployed, plus the underemployed, plus two groups of persons marginally attached to the labour force:

(i) persons actively looking for work, not available to start work in the reference week, but available to start work within 4 weeks; and

Relative standard errors (RSEs) for state and territory underutilisation rates will be slightly smaller than the corresponding RSEs for the unemployment rate. However, RSEs associated with the individual population groups contributing to the rates for each state and territory are likely to be too high for most practical purposes.

MEASURES OF LABOUR UNDERUTILISATION BY STATE AND TERRITORY - September 2001

Relative standard errors (RSEs) for age-based underutilisation rates will be slightly smaller than the corresponding RSEs for the unemployment rate. However, RSEs associated with the individual population groups contributing to the rates for each age group are likely to be too high for most practical purposes.

MEASURES OF LABOUR UNDERUTILISATION BY AGE GROUP - September 2001

Extended

Long-term

Labour force

labour force

unemployment

Unemployment

underutilisation

underutilisation

rate

rate

rate

rate

Age group (years)

%

%

%

%

15-19

1.8

17.5

31.0

32.0

20-24

2.1

10.1

18.0

18.9

25-34

1.2

6.4

10.7

11.4

35-44

1.2

4.9

10.1

10.9

45-54

1.7

4.6

9.2

10.2

55-69

2.1

4.5

8.4

11.7

Total(a)

1.5

6.8

12.5

13.6

(a) Includes those aged 70 years and over

FUTURE DEVELOPMENTS

The ABS is developing an annual hours-based measure of the labour force underutilisation rate. This new measure will be available in 2003, initially for September 2002 data. The ABS will also collect information on the number of people in time-related underemployment each quarter, commencing with February 2003. As part of future developments in measuring labour underutilisation, the ABS is examining the inclusion of additional population groups whose labour is underutilised.